3.

Current Position Analysis

Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current assets and current liabilities at the end of two recent years:

	Current Year (in millions)		Previous Year (in millions)
Cash and cash equivalents	$1,692		$1,502
Short-term investments, at cost	1,202		2,790
Accounts and notes receivable, net	3,820		2,862
Inventories	2,798		3,730
Prepaid expenses and other current assets	932		1,380
Short-term obligations	298		3,168
Accounts payable	7,162		7,052

a. Determine the (1) current ratio and (2) quick ratio for both years. Round to one decimal place.

	Current Year	Previous Year
1. Current ratio
2. Quick ratio

b. The liquidity of Sherwood has some over this time period. Both the current and quick ratios have . Sherwood is a company with resources for meeting short-term obligations. Its liquidity as measured by the current and quick ratios has during this period.

4.

Accounts Receivable Analysis

Xavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions):

	Xavier		Lestrade
Sales	$8,500,000		$4,585,000
Credit card receivablesbeginning	820,000		600,000
Credit card receviablesending	880,000		710,000

a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year.

	Xavier		Lestrade
1. Accounts receivable turnover
2. Number of days' sales in receivables		days		days

b. Xavier's accounts receivable turnover is much than Lestrade's. The number of days' sales in receivables is for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables quickly than Lestrade. As a result, it takes Xavier time to collect its receivables.